Rural savers hit as Gippsland lender teeters

Victoria-based lender Gippsland Secured Investments has frozen $150 million of savings from mostly local investors, putting the future of savings among thousands of rural Victorians in doubt.

The move represents the latest regional lender to come under strain following the collapse last year of Banksia Securities, another debenture house which put $660 million worth of savings under a cloud, hitting about 15,000 investors, many of whom also live in regional Victoria.

Rural Victorian customers of Gippsland Secured Investments will not be able to access their savings. Photo: Louise Kennerley

As a non-bank lender, Gippsland offers investors high interest on debentures and then lends these funds out as mortgages or commercial property loans.

Given Gippsland does not hold a banking licence, the funds in the debentures are not backed by the Australian government's bank deposit guarantee.

Late on Friday, Gippsland told investors that it had been forced to place a voluntary suspension of withdrawals of funds following a review of its lending book. This review discovered a higher than expected level of loans that had soured.

"Although this review has not been completed, the directors of GSI have been provided with information showing that there will be a material increase in GSI's provisions for impairment of loans," Gippsland said in a statement.

"GSI has therefore decided to suspend further redemptions of 'at call' and term investments."

The finance house said it was no longer accepting any new investments. Gippsland has six branches across eastern Victoria with its head office in Bairnsdale.